tag:blogger.com,1999:blog-582368152716771238.post1164526437238103626..comments2024-03-28T14:41:03.793-05:00Comments on The Grumpy Economist: Summer InstituteJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger22125tag:blogger.com,1999:blog-582368152716771238.post-35447908729413222922014-07-17T14:11:32.669-05:002014-07-17T14:11:32.669-05:00Anonymous,
"We have to accept that there may...Anonymous,<br /><br />"We have to accept that there may be a different explanation of how things work which is not consistent with how another theory explains how it works...All very plausible and coherent explanations but all cannot be theoretically right at the same time."<br /><br />Doesn't a government legislated legal framework reduce the number of plausible economic theories?<br /><br />Granted that legal structure is subject to flux - laws get written, re-written, and destroyed. Granted also, that a legal system is something that is agreed upon by a group of people and may apply only to that group.<br /><br />Nonetheless, doesn't a government mandated legal system provide a formal axiomatic system under which economics operates?<br /><br />FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-13282270084708459692014-07-17T10:18:17.747-05:002014-07-17T10:18:17.747-05:00"Surely, logical consistency between a group ..."Surely, logical consistency between a group of theories in a field of study must be maintained."<br /><br />Within a theory yes. Between theories, no. Most certainly not. That is the difference between a science and a theology. (A theology may reconcile the theory of evolution and creation; but that is not the job of a science or social science).<br /><br />We have to accept that there may be a different explanation of how things work which is not consistent with how another theory explains how it works. For example a Marxian. Realist or Liberal explanation of the relationship between states. All very plausible and coherent explanations but all cannot be theoretically right at the same time. We use these as reference points. The proof is in the empirical/historical study which should not make any assumptions about anything being axiomatic.<br /><br />In theory all such theories cannot be right at the same time. In real world complexity, all the theories and none of them are probably going to be right at the same time!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-2149268796667653252014-07-17T08:58:47.525-05:002014-07-17T08:58:47.525-05:00Anonymous,
"One cannot just dismiss, out of ...Anonymous,<br /><br />"One cannot just dismiss, out of hand, a discipline simply because all of its propositions are not deducible from some set of fundamental propositions."<br /><br />If a proposition is not deducible from some set of fundamental proposition then it may be an undiscovered fundamental proposition in and of itself. The number of fundamental propositions can be limitless, just as long as they are logically consistent.<br /><br />Surely, logical consistency between a group of theories in a field of study must be maintained.FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-71710626378670344162014-07-17T08:50:16.009-05:002014-07-17T08:50:16.009-05:00Anonymous,
The scientific method is what I believ...Anonymous,<br /><br />The scientific method is what I believe John is alluding to here. <br /><br />http://en.wikipedia.org/wiki/Scientific_method<br /><br />"The chief characteristic which distinguishes the scientific method from other methods of acquiring knowledge is that scientists seek to let reality speak for itself, supporting a theory when a theory's predictions are confirmed and challenging a theory when its predictions prove false."<br /><br />From John's article:<br /><br />"I complained a bit about Eggertsson and Mehrotra's long efforts to tie their work to quotes from verbal speculations of Keynes, Alvin Hansen, Paul Krugman and Larry Summers." <br /><br />And<br /><br />"Our papers should stand on their own too. They are right or wrong if they are logically coherent and describe the data, not if they fulfill the vague speculations of some sage, dead or alive."<br /><br />What John says is that rather than relying on experimentation to verify / disprove their theory, Eggertsson / Mehrotra instead sought confirmation through the proclamations of "some sage".<br /><br />The problem with properly applying the scientific method to any endeavor is identifying and eliminating bias and observer effects. An example of observer effect in economics is described here:<br /><br />http://en.wikipedia.org/wiki/Hawthorne_effect<br /><br />Imagine if Newton had to worry about observation effects when formulating classical mechanics. Fortunately for Newton, the apple was emotionless before striking him on the head. If the apple was shy, it might have diverted course. If the apple was aggressive, it might have struck him harder than expected.<br /><br />Should economics embrace the scientific method - formulate theory, confirm with data? FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-61462359673074227022014-07-17T05:45:16.900-05:002014-07-17T05:45:16.900-05:00"The idea that a good scientific theory must ..."The idea that a good scientific theory must be derived from a formal axiomatic system has little if any foundation in the methodology or history of science. " <br /><br />"one cannot just dismiss, out of hand, a discipline simply because all of its propositions are not deducible from some set of fundamental propositions."<br /><br />David Glasner.<br /><br />I think these comments resonate with a lot of people and touch on things you talk about here making a good counterpart to your post - which was also quite good.<br /><br />http://uneasymoney.com/2014/07/15/another-complaint-about-modern-macroeconomics/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80323032950436257892014-07-17T05:35:48.152-05:002014-07-17T05:35:48.152-05:00"Physics does not write papers about 'the..."Physics does not write papers about 'the Newton-Aristotle debate.'"<br /><br />Is physics the model that economics should replicate?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-39711872670747148752014-07-16T08:19:23.923-05:002014-07-16T08:19:23.923-05:00Alternatively, it is because different people are ...Alternatively, it is because different people are interested in different things. Try broadening your interests.Ramnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-66939868546758706782014-07-15T11:35:52.272-05:002014-07-15T11:35:52.272-05:00Is economics waiting for it's age of enlighten...Is economics waiting for it's age of enlightenment?<br /><br />http://en.wikipedia.org/wiki/Age_of_Enlightenment<br /><br />"The Age of Enlightenment (or simply the Enlightenment or Age of Reason) was a cultural movement of intellectuals beginning in late 17th-century Europe emphasizing reason and individualism rather than tradition. Its purpose was to reform society using reason, to challenge ideas grounded in tradition and faith, and to advance knowledge through the scientific method."<br /><br />FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-61316005551681919852014-07-15T02:05:21.339-05:002014-07-15T02:05:21.339-05:00Alright it is the job of politicians who act on th...Alright it is the job of politicians who act on the advice of economists.<br /><br />Whoops that is not right either. Politicians do not act on the advice of economists. Probably not a bad idea either. Unless they want to lose their job. (Economists do not have to worry about their forecasts or prescriptions being wrong or losing their jobs - most of them are tenured professors or work in the finance industry - the latter particularly ingenious at justifying wages and jobs that bear no relation to MP.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-37920108802262102462014-07-14T21:40:22.567-05:002014-07-14T21:40:22.567-05:00Follow-up comment: People should go back and read... Follow-up comment: People should go back and read Fischer Black again with that in mind. He was very smart, and had a unique way of thinking, and there's likely gold in them there hills of words. Eric Rasmusenhttps://www.blogger.com/profile/01609599580545475695noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-38943522587688896452014-07-14T21:39:21.768-05:002014-07-14T21:39:21.768-05:00"I complained a bit about Eggertsson and Meh..."I complained a bit about Eggertsson and Mehrotra's long efforts to tie their work to quotes from verbal speculations of Keynes, Alvin Hansen, Paul Krugman and Larry Summers. Their rhetorical device is, "aha, these equations finally explain what some sage of 80 years ago or Important Person today really meant." "<br /><br /> I like historical allusions. Even in physics, the old guys may be worth reading. Certainly that's true of math--- Euclid and Hilbert may not be up to date, but they are suggestive of roads not pursued. Econ ever more so, because it's harder to get a grip on things. What we need to avoid, tho, is discussion of "what Keynes really meant." The reason is that he didn't know what he meant--- he had some good intuitions that we ought to pay attention to, but their value is in stimulating us now to pursue an idea, not to try to rediscover anything. Eric Rasmusenhttps://www.blogger.com/profile/01609599580545475695noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-74975064307652270152014-07-14T19:56:46.703-05:002014-07-14T19:56:46.703-05:00"Physics does not write papers about 'the..."Physics does not write papers about 'the Newton-Aristotle debate.'"<br /><br />I actually laughed out loud upon reading that!<br /><br />Another excellent essay! (No, you're not an old fogey!)<br />Neal Reynoldsnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-86606779669946637422014-07-14T12:28:21.511-05:002014-07-14T12:28:21.511-05:00Because you can't understand the models. Try ...Because you can't understand the models. Try publishing something.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-75564439999052641252014-07-14T12:15:39.578-05:002014-07-14T12:15:39.578-05:00"We are after all trying to end recessions th..."We are after all trying to end recessions the best way we can and we should be constantly looking for the best way to do understand their causes."<br /><br />Sounds to me (a non-economist scientist) that economics is (again) showing signs of its shakey / uncertain / disputed philosophic foundations.<br /><br />Why is it the job of the economist to "end recessions"? What bestows ye such a duty / power?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-60194285337877978192014-07-14T09:07:46.174-05:002014-07-14T09:07:46.174-05:00Do you like Ricardian Equivalence?
No neither do...Do you like Ricardian Equivalence? <br /><br />No neither do I. That is an example of the New-Classical school going back to the Classics for ideas with the result that we get a degenerate research programme and no good policy ideas.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-76403392008875941912014-07-14T08:37:41.766-05:002014-07-14T08:37:41.766-05:00I have long given up on keeping up. Regardless, I...I have long given up on keeping up. Regardless, I read recently an excellent "bubbles paper", by Stephano Giglio et al (Boothe) in which they have nearly the exact data one would want from a controlled experiment to resolve if bubbles drove UK property prices. Just to meddle, I proposed a non regression way to exploit their remarkable data. Have a lookRFloodnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-9625158788092713182014-07-14T07:03:59.245-05:002014-07-14T07:03:59.245-05:00Yep, I tend to agree: "Perhaps it's time...Yep, I tend to agree: "Perhaps it's time to merge fluctuations with finance, where we seem to be talking about the same issues and using the same methods, and growth to merge with institutions and political or social economics." Of course, on the econometric side, the NBER's Forecasting and Empirical Methods in Macro and Finance group did that years ago. Perhaps more on that in my next No Hesitations post. Francis Dieboldhttps://www.blogger.com/profile/13985418407082356866noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-48356835501573630882014-07-14T05:47:09.005-05:002014-07-14T05:47:09.005-05:00"Perhaps it's time to merge fluctuations ..."Perhaps it's time to merge fluctuations with finance, where we seem to be talking about the same issues and using the same methods, and growth to merge with institutions and political or social economics. "<br /><br />Makes a lot of sense. Although I agree more with the "same issues" than "same methods". I think economics given the nature of the discipline, should be eclectic and open-minded in relation to methodology. We are after all trying to end recessions the best way we can and we should be constantly looking for the best way to do understand their causes. That might not be the way finance currently does things. I think a big criticism in macro-teaching of the last 40 years is a lack of critical reasoning that asks why a certain methodology has become prominent. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80931815099378035132014-07-14T00:03:28.603-05:002014-07-14T00:03:28.603-05:00I also have “trouble with the negative natural rat...I also have “trouble with the negative natural rate.", or to be blunt, I think it’s hogwash. It’s based on the assumption that adjusting interest rates is the only or the only possible way of adjusting demand.<br /><br />That’s nonsense: in a recession, the state could perfectly well go wild with the printing press, i.e. print and spend far too much new money into the economy. That would cure or largely cure the recession, but to deal with the excess demand, interest rates would have to be raised. Indeed, the latter idea is very much what market monetarists like Scott Sumner argue. That is they argue that the central bank will always negate excess fiscal stimulus.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-56336699008864518982014-07-13T23:36:30.478-05:002014-07-13T23:36:30.478-05:00Wow, now I wish I could have been there. The philo...Wow, now I wish I could have been there. The philosophy-of-science stuff is actually more interesting to me than the content of the models!Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-22272505227614898092014-07-13T18:31:21.743-05:002014-07-13T18:31:21.743-05:00I read your slides on the secular stagnation paper...I read your slides on the secular stagnation papers. They don't seem to incorporate international forces. You note yourself that lending abroad means that r will not be negative. But this does not consider the special role of the US dollar - what some have dubbed exorbitant privilege. Assets denominated in US dollars should sell at a premium. That is how I understand a negative real rate in the US but not in Australia, Canada, Israel, etc, and why the European Central Bank has ventured into parking fees on reserves held there.<br /><br />You also point out that storage prevents negative real rates. But we do have a problem with storage. In Canada and Australia there is plenty of talk of housing bubbles. And in London and New York, overseas buyers are even bidding up apartments without looking at them or intending to live in them.Anwerhttps://www.blogger.com/profile/08277173974258559733noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-2819284750835914882014-07-13T17:58:43.255-05:002014-07-13T17:58:43.255-05:00John,
"Yes. Physics does not write papers ab...John,<br /><br />"Yes. Physics does not write papers about the Newton-Aristotle debate. Our papers should stand on their own too."<br /><br />Physics has a world to perform unbiased repeatable experimentation in. No one needs to debate Aristotlean physics versus Newtonian physics, because they can do their own verification.<br /><br />Economics (the science of money) has no external unbiased viewpoint. On the simplest level, the economist gets paid in the medium he / she is investigating.<br /><br />FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.com